More Efficiency Urged for Magazines

CHRISTINE BLANK

TAMPA, Fla. — The publishing industry has to make major efficiency improvements to be successful at retail in the future, industry executives said at the Retail Conference of the Magazine Publishers of America and International Periodical Distributors Association here earlier this month.

A panel of publishers, distributors and a retailer, looked ahead to 2013, and shared its vision of what the magazine retailing industry will look like.

The industry must boost retail profitability, eliminate duplicate functions and implement scan-based data, the panelists said.

“For the supply chain to survive, sweeping changes must be made to simplify and modernize the supply chain. All unnecessary costs and duplication must be eliminated,” said Glen Clark, president of the News Group for North America and executive vice president of the Pattison Group, Vancouver, British Columbia.

John Loughlin, executive vice president and general manager of Hearst Magazines, New York, agreed that eliminating duplication should be one of the industry's top priorities.

“We need to tackle the many redundant functions that exist between and among retailers, distributors and wholesalers,” Loughlin said.

At the same time, retailers and the publishing supply chain must improve category management and title optimization for the industry to thrive, he said.

“I embrace category management with the goal of putting the optimal title selection in each chain and, ideally, each store. It is a fundamental way that we have to ultimately get waste out of the system, and we need sales efficiency at the store level,” Loughlin said.

Single-copy publishers should hold each title to an overall efficiency target that is “real, measurable and comparable to best in class,” Clark said.

At the same time, the selection of titles should be driven by shopper preferences, not retailer preference, Loughlin said.

Still, a Barnes & Noble executive on the panel said that cutting titles is not the answer to improving efficiency.

“Title rationalization is not something I would be interested in at all. The key to our success is that we carry over 5,000 magazines. And we ended last year with our best balance sheet ever,” said Jaime Carey, vice president of Barnes & Noble's Newsstand Division.

“Don't lose focus on investing in your retail systems,” Carey advised publishers, distributors and wholesalers. “If you generate more retail sales, all these other issues seem easier to deal with.”

To that end, the industry needs to get the profitability message out to retailers and ensure that magazines are displayed at checkouts and other relevant areas, panelists said.

“We should make clear the profitability that magazines deliver in the overall mix. We need to get full-facing displays, and build out the entertainment reading zones to stimulate interest and purchase,” Loughlin said.

“We are in a hugely escalating battle for consumers' attention and share of mind, which means we need to take some lessons from the consumer packaged goods playbook and be creative and create promotions,” he added.

In addition, both retailers and consumers need to be reminded about the value of magazines. “There is something fundamentally amiss when a ‘grande cappuccino’ costs more than a magazine,” Loughlin said.

Rich Jacobsen, president and chief executive officer of Time Warner Retail Sales & Marketing, reminded retailers that magazines and books are a “hot category.”

“When was the last time consumers lined up to buy the latest Coke product, gum or another product? They do that all the time for magazines and books, such as ‘Harry Potter,’” Jacobsen said.

This month, consumers refused to leave a Barnes & Noble store near Green Bay, Wis., until they received new shipments of a commemorative magazine about retired Green Bay Packers quarterback Brett Favre, Jacobsen said.

“We should focus on the positive and face things like other hot categories do — as an opportunity to improve,” Jacobsen says.

Publishers, wholesalers and retailers should share shrink data and the industry should embrace scan-based trading, Clark said.